MERC approved ASL's FY2023-24 power procurement plan (10-30 MW) via exchange-linked contracts as a temporary measure but rejected the proposed MoU-based wind PPA at Rs.3.50/unit
Case of AEML SEEPZ Limited (ASL) for approval of Power Procurement plan as per the direction of the Commission in Order dated 24 May 2023 in IA No. 25 of 2023 in Case No. 40 of 2023 and under Regulation 5.1 of MERC (Multi Year Tariff) Regulation, 2019.
ASL, a deemed distribution licensee for SEEPZ-SEZ, was directed by MERC (Order dated 24 May 2023) to start operations via competitive-bid power procurement before filing its MYT petition. ASL's DEEP Portal tenders (25 MW conventional, 16-20 MW wind) drew no bids, so it ran offline exchange-linked bidding (discount over IEX DAM/GDAM) and signed an MoU with MPL for 20 MW wind power at a ceiling rate of Rs.3.50/unit. ASL sought Commission approval of its FY2023-24 procurement plan, the exchange-linked discounts, and the MoU-based wind tariff.
- Approved ASL's power procurement plan for FY2023-24 based on estimated load of 10-30 MW
- Allowed exchange-linked contracts (discount over IEX DAM/GDAM) as a temporary measure only, since true Section 63 competitive bidding failed to attract bidders
- Directed ASL to immediately launch fresh Section 63 competitive bidding and return to Commission for tariff adoption within 6 months
- Rejected the MoU-based wind PPA with MPL at ceiling rate of Rs.3.50/unit, holding Section 62 tariff must be Commission-determined via due process, not bilaterally fixed
- Permitted ASL to instead procure wind power at Rs.2.65/unit (MSEDCL-approved wind ceiling rate) and separately claim actual operating charges in its ARR
- Allowed ASL to meet any additional real-time requirement through power exchanges or other permissible routes
- ASL to immediately initiate fresh competitive bidding under Section 63 of EA 2003 for firm power sources
- ASL to approach Commission for tariff adoption within 6 months from 3 October 2023
- ASL may procure wind power at Rs.2.65/unit from wind generators, claiming operating charges separately in ARR
- ASL to continue efforts to secure firm PPA sources instead of relying solely on non-firm exchange-linked contracts
- ASL to meet residual/real-time requirements via power exchange or inter-Discom contracts
- ASL to reassess and re-file power procurement plan for FY2024-25 and beyond separately
- • C&I consumers in SEEPZ-SEZ area face continued tariff uncertainty as ASL relies on non-firm, availability-based exchange contracts rather than firm long-term PPAs
- • Wind/RE developers and traders cannot get bilaterally negotiated MoU tariffs rubber-stamped by MERC; Section 62 tariffs need full regulatory due process, capping near-term RE deal flexibility
- • Precedent reinforces that discount-over-exchange bidding outside DEEP Portal is only a stop-gap, not a scalable long-term open-access/procurement model
- • Developers should watch for ASL's fresh Section 63 tender within 6 months as a genuine bidding opportunity, distinct from the earlier undersubscribed DEEP tenders
This order is a caution against dressing up bilateral MoU deals as Section 62 tariffs — MERC wants full cost transparency before adopting any RE tariff, even when justified by wheeling/trading add-ons. For developers eyeing SEEPZ-SEZ or similar deemed-licensee SEZs, the real opportunity is ASL's mandated fresh Section 63 tender within 6 months; exchange-linked discount contracts are stopgaps only, not bankable long-term offtake. C&I buyers should track ASL's re-tender closely as pricing could reset closer to the Rs.2.65/unit wind ceiling rather than the higher Rs.3.50 MoU ask.
Growthifye does not take responsibility for the accuracy of this information. Values are compiled from tariff orders published on the websites of State Electricity Regulatory Commissions and distribution licensees (plus CEA / MoP / Grid-India), parsed automatically and shown with their source. Always verify against the signed order before any commercial decision. This one-pager is a Vidura-assisted summary of the official order; the signed order prevails.